Apple stock falls after outlook

Published 7:02 pm, Wednesday, January 23, 2013

While it would take a crowbar to pry iPhones and iPads out of their fans' hands, investors have been falling out of love lately with the company that makes them.

On Wednesday, Apple did not appear to provide a strong enough reason for investors to warm to it again. It warned that the blockbuster sales growth of the past five years is slowing drastically, as iPhone sales are starting to plateau.

The outlook sent Apple shares down 11 percent, wiping out a year's worth of gains.

Analysts said the warning suggested that Apple no longer can sustain its growth without some completely new product.

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“It has been an overriding concern with Apple that they would not be able to generate revenue growth just rolling out new versions of old products,” said Jeff Sica, president and chief investment officer of SICA Wealth Management. “Now they've proven it in their numbers.”

Apple said it expects sales of between $41 billion and $43 billion in the current quarter, which ends in March. That would usually be little cause for concern, though analysts were expecting $45.6 billion, because Apple usually lowballs its forecasts. But Chief Financial Officer Peter Oppenheimer said the company is changing its practices and providing a reasonable range rather than a single, easily achievable number.

That means Apple is looking at sales growth of 7 percent from last year's January-to-March quarter, a striking number for a company that's posted double-digit increases in every quarter except one since 2008.

Apple shares fell $55.58 to $458.43 in extended trading, after the release of the results.

Apple's enviable profit growth also hit a wall in the October-to-December quarter. It said net income in the fiscal first quarter was $13.1 billion, or $13.81 per share, flat with a year ago. That still beat expectations, as analysts polled by FactSet had forecast earnings of $13.48 per share.

Revenue was $54.5 billion, up 18 percent from a year ago. Analysts were expecting $55 billion.

Apple shipped 47.8 million iPhones in the quarter, about 1 million less than analysts were expecting, and 22.9 million iPads, also about 1 million short.

Most surprisingly, Mac sales were also 1 million short, at 4.1 million. That's a 22 percent drop from shipments a year ago. Oppenheimer said this was because of difficulties producing enough new iMac desktops fast enough.

Rob Cihra, an analyst at Evercore Partners, said Apple's iPhone and iPad sales missed some of the most optimistic forecasts, but “all in, it was a pretty darned good quarter.”